Control mechanisms of their subsidiaries by multinational firms: A multidimensional perspective

Multinational companies use a wide range of mechanisms to keep control over a subsidiary abroad such as the share of capital in the case of international joint ventures, expatriation, active participation in the board of directors, staffing key management positions, training and socialization of employees, technology transfer, and so on. However, only a few empirical studies on the control of international subsidiaries embrace all these dimensions simultaneously and show how they interact. This paper presents the empirical results of a quantitative survey of 316 subsidiaries, international joint ventures and wholly foreign owned enterprises, set up in China by European and Japanese multinationals. The main objective of the survey is to bring out an inductive multidimensional model of control, and to allow a better understanding of complex interaction and balance between the instruments of control of a subsidiary abroad.